In a strategic move to adapt to changing consumer preferences, AG Barr, the maker of Irn-Bru, has acquired the soft drink companies Fentimans and Frobishers. This expansion signifies AG Barr’s commitment to diversifying its portfolio as interest grows for non-alcoholic beverages.
AG Barr’s Acquisitions
AG Barr purchased Fentimans, a brand with a rich history of ginger beer production since 1905, for approximately £38 million using a combination of cash and debt.
Fentimans began in West Yorkshire when Thomas Fentiman, an iron puddler from Cleckheaton, acquired a recipe for botanically brewed ginger beer. The brand also offers a variety of other soft drinks, including Rose Lemonade and Curiosity Cola.
Additionally, AG Barr acquired Frobishers, a premium fruit juice maker based in Devon, for £13 million, as part of its strategy to enhance growth by “broadening the brand portfolio”.
Financial Outlook
Euan Sutherland, chief executive of AG Barr, remarked: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following these acquisitions, AG Barr reported a rise in shares of 33p, or 5 percent, to 683p.
The company anticipates a 4 percent increase in revenue, projecting it to reach £437 million for the fiscal year ending in January, with results expected in March. Analysts noted that this suggests a sales growth of 4.8 percent in the latter half of the year, compared to 3.1 percent in the first half.
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Irn-Bru itself has experienced “modest growth” in the latter half of the year due to effective marketing and distribution initiatives, with gains from its Rubicon and Boost brands compensating for a downturn at Funkin Cocktails. Adjusted profit margins are expected to increase to approximately 14.7 percent, compared to 13.6 percent the previous year, driven by efficiency initiatives and supply chain investment.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Market Insights
Analysts at Panmure Liberum noted that AG Barr’s entry into the burgeoning adult soft drink market is expected to produce substantial cost synergies through in-sourcing production and reducing overheads, while also creating significant revenue synergies via distribution expansion.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr primarily generates its sales in the UK. Its brand portfolio also includes Moma oat milk, Tizer, and Rio. Last year, the company chose to discontinue the Strathmore bottled water brand, acknowledging its challenges in recent years.
History of AG Barr
Founded in 1875 by Robert Barr in Falkirk, the company began by selling “aerated waters”, a term used for soft drinks at the time. It has been passed down through generations, launching Iron Brew in 1901, which was later rebranded as Irn-Bru in 1946 to meet food labeling requirements.
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to expand its soft drink offerings.
- The purchase of Fentimans cost approximately £38 million.
- Frobishers was acquired for £13 million to diversify AG Barr’s brand portfolio.
- AG Barr expects a 4 percent revenue increase to £437 million.
- The company anticipates improved profit margins due to efficiency measures.
- AG Barr’s shares rose 5 percent following the announcements.
FAQ
What brands does AG Barr own?
AG Barr’s brand portfolio includes Irn-Bru, Moma oat milk, Tizer, and Rio.
When was Fentimans founded?
Fentimans was established in 1905 and is known for its botanically brewed ginger beer.
Why did AG Barr acquire Frobishers?
The acquisition of Frobishers aims to broaden AG Barr’s brand portfolio and enhance growth opportunities.
What was the purpose of AG Barr’s recent acquisitions?
AG Barr’s acquisitions are intended to capitalize on the increasing demand for non-alcoholic beverages.
Overall, AG Barr’s acquisition strategy emphasizes its goal to grow within the soft drinks market while providing a diverse range of choices for consumers. With these recent acquisitions, the company is poised to adapt effectively to shifting market dynamics.
